Bridge loan

A loan that “bridges” the gap between the purchase of a new home and the sale of the borrower’s current home. The borrower’s current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home’s first mortgage at the Bridge loan’s Closing, while others pile the new debt on top of the old. They usually run for a term of six months.